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Foreign currency in Mexican tax: which exchange rate applies, exchange gains and the inflation adjustment on dollar balances

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Last verified: 2026-10-26 · Status: Stable

Mexican taxes are computed and paid in pesos. A foreign currency amount is converted at the rate at which the currency was actually bought, and if it was not bought, at the Banxico rate published in the DOF the day before the tax arises. Exchange gains and losses on foreign currency debts and receivables, principal and interest, are taxed as interest, and can never be more favorable to the taxpayer than the DOF rate of the day. Dollar debts and receivables also enter the annual inflation adjustment, valued at the exchange rate on the first day of each month, which can create taxable income for a company that is a net debtor.

USD conversions use MXN 18.5026 per US dollar, the US Federal Reserve H.10 noon buying rate in New York for 16 October 2026 (FRED series DEXMXUS), the latest observation available when this page was verified. Legal and tax conversions in Mexico use the Banxico FIX published in the DOF, which differs slightly. Conversions are for orientation only.

Key facts

Exchange rate for converting foreign currency amounts for tax	Rate at which the currency was acquired; otherwise the Banxico rate published in the DOF the day before the tax arises CFF art. 20, third paragraph, as of 2026-10-26 · in force
Tax treatment of exchange gains and losses	Treated as interest; limited to the DOF FIX of the day LISR art. 8, as of 2026-10-26 · in force
Valuation of foreign currency credits and debts for the annual inflation adjustment	Exchange rate on the first day of each month LISR art. 44, as of 2026-10-26 · in force
Currency in which federal taxes are paid	Mexican pesos (payments due abroad may be in local currency) CFF art. 20, first paragraph, as of 2026-10-26 · in force

The rule

1. Which rate converts a foreign currency amount for tax. Taxes and their accessories arise and are paid in pesos, although payments that must be made abroad may be made in the local currency. To determine taxes, use the exchange rate at which the foreign currency was acquired; if there was no acquisition, use the rate Banco de México publishes in the DOF on the day before the tax arises, and on days without publication, the last rate published before that day. The same Banxico rate applies to foreign trade taxes and to tax payments made abroad. For currencies other than the US dollar, multiply that rate by the dollar equivalent of the currency in the table Banxico publishes during the first week of the following month.
Cost to do it: No fee. Using the wrong rate is a computation error that SAT can assess with surcharges and fines (see the tax audits page).
Example: A Mexican company invoices a US client USD 100,000 on a Wednesday and the income accrues that day; it did not buy the dollars, so it converts at the DOF rate published Tuesday. At an illustrative 18.5026, the income is MXN 1,850,260. / USD 100,000 sale; MXN 1,850,260 at 18.5026.Código Fiscal de la Federación (CFF), DOF 31 December 1981 (Chamber of Deputies consolidated text, last reform DOF 9 April 2026), Art. 20, first, third, fifth and sixth paragraphs, 1981-12-31 official text · verified 2026-10-26

2. Foreign tax credits are converted at the date the tax arose. When tax rules allow a credit for taxes paid in foreign currency, the rate is the one in the previous rule, referred to the date the tax being credited arose or, failing that, the date it was paid.
Cost to do it: No fee; the rate choice changes the peso value of the credit.
Example: A Mexican parent receives a dividend from a US subsidiary with USD 5,000 of US withholding. For the Mexican foreign tax credit it converts the USD 5,000 at the Banxico DOF rate for the day the US tax arose (MXN 92,513 at an illustrative 18.5026). / USD 5,000 of foreign tax credited.Código Fiscal de la Federación (CFF), DOF 31 December 1981 (Chamber of Deputies consolidated text, last reform DOF 9 April 2026), Art. 20, fourth paragraph, 1981-12-31 official text · verified 2026-10-26

3. Withholding on payments abroad in foreign currency. Where a payment to a foreign resident is subject to withholding, the payer must pay over an amount equal to the tax it should have withheld when the payment becomes due or when it pays, whichever comes first. For payments in foreign currency, the tax is converted to pesos at the moment the payment is due or paid.
Cost to do it: No fee; the withholding itself is the cost (rates on the withholding taxes page).
Example: A subsidiary owes its foreign licensor a USD 50,000 royalty due on 30 June and pays it on 15 July. The withholding is computed and converted to pesos at 30 June, the earlier date. / USD 50,000 royalty; withholding fixed at the due date.Ley del Impuesto sobre la Renta (LISR), DOF 11 December 2013 (Chamber of Deputies consolidated text, last reform DOF 1 April 2024), Art. 153, 2013-12-11 official text · verified 2026-10-26

4. Exchange gains and losses are interest. Gains and losses from fluctuations of foreign currency, accrued on principal and on interest, receive the tax treatment of interest. The gain cannot be lower, and the loss cannot be higher, than the one computed with the Banxico rate for settling foreign currency obligations payable in Mexico (the FIX) published in the DOF for the day the gain or loss arises. As interest, exchange losses on debts count toward the interest limitation rules for related party debt and the 30 percent cap.
Cost to do it: Taxable or deductible at the 30 percent corporate rate.
Example: A company holds a USD 1,000,000 receivable booked at an illustrative 19.0000 (MXN 19,000,000) and collects it when the FIX is 18.5026 (MXN 18,502,600). It has an exchange loss of MXN 497,400, deductible as interest, worth MXN 149,220 of tax at 30 percent. / Exchange loss of about USD 26,883; tax value about USD 8,065.Ley del Impuesto sobre la Renta (LISR), DOF 11 December 2013 (Chamber of Deputies consolidated text, last reform DOF 1 April 2024), Art. 8, paragraph on exchange gains (reformed DOF 12 November 2021); art. 28, sections XXVII and XXXII, 2021-11-12 official text · verified 2026-10-26

5. Dollar balances in the annual inflation adjustment. At year end, companies compute the annual inflation adjustment on the difference between the average annual balance of their debts and of their credits (the sum of month end balances divided by the number of months). A net debt balance times the annual inflation factor is taxable income; a net credit balance gives a deduction. Foreign currency credits and debts are valued at the exchange rate on the first day of each month. Receivables from foreign resident shareholders are not counted as credits unless they are in foreign currency and arise from exports of goods or services.
Cost to do it: No fee. A net debtor pays 30 percent tax on the inflation adjustment.
Example: A company whose only balance is a USD 1,000,000 loan (MXN 18,502,600 at 18.5026 on the first day of every month) and an illustrative annual inflation factor of 0.0400 has taxable inflation adjustment of MXN 740,104, costing MXN 222,031.20 of tax. / On USD 1,000,000 of net dollar debt, about USD 40,000 of taxable adjustment and USD 12,000 of tax at the illustrative factor.Ley del Impuesto sobre la Renta (LISR), DOF 11 December 2013 (Chamber of Deputies consolidated text, last reform DOF 1 April 2024), Arts. 44 and 45, section II, 2013-12-11 official text · verified 2026-10-26

6. Paying the tax itself. Taxes are paid in pesos, by cheque of the same bank where payment is made, electronic transfer to the Federal Treasury, or credit and debit cards under SAT rules. A company that keeps its cash in dollars therefore has to convert enough to pesos before each payment date.
Cost to do it: FX spread on converting dollars to pesos at the company's bank before the payment date.
Example: A subsidiary that keeps its cash in dollars converts USD 30,000 to pesos (MXN 555,078 at 18.5026) before the 17th to pay its monthly provisional tax payment. / USD 30,000 converted to pay taxes.Código Fiscal de la Federación (CFF), DOF 31 December 1981 (Chamber of Deputies consolidated text, last reform DOF 9 April 2026), Art. 20, first and seventh paragraphs, 1981-12-31 official text · verified 2026-10-26

Situation	Rate	Rule
Foreign currency actually bought	Rate at which it was bought	CFF art. 20
Income, expense or tax in foreign currency, no purchase	Banxico rate in the DOF the day before the tax arises (last published if none that day)	CFF art. 20
Foreign trade taxes and tax payments abroad	Banxico DOF rate as above	CFF art. 20
Currencies other than the US dollar	DOF dollar rate times the Banxico monthly equivalence table	CFF art. 20
Foreign tax credit	DOF rate on the date the foreign tax arose, or when paid	CFF art. 20
Withholding on payments abroad in foreign currency	Rate when the payment is due or paid, whichever is first	LISR art. 153
Exchange gains and losses	Not more favorable than the FIX published in the DOF for the day	LISR art. 8
Annual inflation adjustment balances	Rate on the first day of each month	LISR art. 44

Which exchange rate Mexican tax law uses, verified 26 October 2026.

Worked example

A Mexican exporter invoices USD 1,000,000 of sales over the year and keeps the proceeds in its company dollar account.
For tax, each sale is converted at the Banxico DOF rate of the day before the income accrues, since the company did not buy those dollars (CFF art. 20). At an illustrative average of 18.5026, taxable sales are MXN 18,502,600.
When the customers pay and the rate has moved, the difference between the peso value at accrual and at collection is an exchange gain or loss, taxed as interest and capped at the DOF FIX (LISR art. 8).
At year end the dollar receivables and payables enter the annual inflation adjustment at the first day of month rates (LISR art. 44).
To pay its monthly provisional taxes, the company converts enough dollars to pesos, because federal taxes are paid in pesos (CFF art. 20).

Step by step

1. Keep a record of the Banxico DOF rate for every business day; your ERP should apply the prior day's DOF rate to foreign currency income and expenses that were not bought with pesos.
2. When you buy dollars from a bank to pay a supplier, keep the bank's confirmation: the acquisition rate prevails for that amount (CFF art. 20).
3. Compute exchange gains and losses monthly on foreign currency balances and check them against the DOF FIX limits (LISR art. 8).
4. Track month start values of dollar credits and debts for the annual inflation adjustment (LISR art. 44).
5. Plan peso liquidity for the 17th of each month, the deadline for monthly provisional income tax payments (LISR art. 14).

Common traps

Using the same day rate. CFF art. 20 points to the rate published in the DOF on the day before the tax arises, not the one published on the day itself.
Using the bank's rate when no dollars were bought. The acquisition rate applies only when foreign currency was actually acquired; otherwise the DOF rate applies (CFF art. 20).
Booking an exchange loss larger than the FIX allows. LISR art. 8 caps the loss at the one computed with the DOF FIX of the day.
Overlooking that a dollar loan counts as debt in the inflation adjustment. A company funded with dollar debt and few receivables can have taxable inflation adjustment income (LISR art. 44).
Counting a receivable from a foreign shareholder as a credit. It is excluded unless in foreign currency and from exports (LISR art. 45, section II).

Sources

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